Posts Tagged debt

I’ve been doing some thinking about tiny houses and my path to them. A little bit ago I realized that there were some key things I did that I realized may have actually taken the good of my tiny house and brought it to the next level: They acted as a force multiplier. What is a force multiplier?It’s crazy to think that things could get even better while living in a tiny house! But when we look at tiny house force multipliers we can really take tiny houses to the next level with some tweaks. Here are five things I’ve come to realize will take your living in a tiny house – or even just those who are living tiny, but not yet in a tiny house – to the next level and change the trajectory of your life so profoundly it will amaze you.

1. Become Totally Debt Free

This seems obvious and its easier said than done, but living debt free does a lot to for you in terms of financial freedom, reducing stress, and opening up opportunities for yourself. What is more, when you’re not paying off debt, not only do you not have that money sink, but you can then leverage those funds in better ways. The opportunity cost here is huge, check out this post.

I also feel the need to clarify that when I say debt free, I mean totally debt free; too often I hear people say “we’re debt free” only to later her about a car payment or student loan. No! That’s not debt free! All forms of debt are essentially shackles placed upon you and thus inhibit your ability to live life on your own terms. For those of you who do have debt, of any kind, make a plan and get rid of it; the only thing that’s worse than debt is being convinced that there is “good debt” or doing nothing about it.

2. Shift To A Location Independent Career

Having a location independent career is essentially having a way to earn a living without having to be physically in one spot all the time. Basically you can earn a living working remotely, not having to be cooped up in a cubical 9-5 five days a week. This has been something that from day one I have always wanted to incorporate into my tiny life and since starting this journey have only recently (early 2013) been able to achieve.

I knew that not having to be in an office would make a huge difference, but now that I have been living this life (see this post), I am beginning to think that it actually has had a larger impact than even moving into a tiny house.

Earning a living in this manner has done two main things for me: 1) I can work from interesting places that best for me 2) Since I don’t have to be in an office, my income is not tied to time spent in a chair, but to how productive I am. This means that I can travel and work from wherever and when I do work, I work as long as it takes to get my tasks done. This often means that I can buckle down, be efficient, then be done and since I can work from awesome places I can then get up and go explore the places I travel to for the rest of the time.

3. Built In Resiliency

Resiliency is the ability to respond to changes and shocks to your life and bounce back quickly. Today in America we are very reliant upon external systems to handle a lot of what we need to do; Things like our food system, our power grid, how most people weather tough times via credit cards, etc. I will try not to go too deep into this because how large of a topic it is, but read this post to learn more about it. Suffice to say, I feel like its important for us to plan to stand on our own two feet and to be able to weather the ups and downs in life. If we plan for those rainy days we extricate ourselves from putting out fires or living crisis to crisis and enter into a place of stability where we can be our best selves.

There is a good part of the world that lives crisis to crisis and for those who are well off, they typically live big purchase to big purchase. It is no wonder that things are like this because 75% of Americans live pay check to pay check. Try to understand what that must do on your health, your relationships, your quality of life, your well being when most people barley can come up for air.

Some examples of this for me have been having money set aside for a rainy day. Opting to have solar panels and a generator. Having a garden and extra seeds. Living in a tiny house that I can move to different locations easily.

4. Diversified Income

This is the next major step I’m trying to incorporate into my life. It’s one that I think will help me boost my resiliency and bring a lot of positives into my life. Basically my goal is to develop a way to earn a living in addition to the one I already make. I want this income to be in a different sector, a different way of making money, and have its strong points be the weak points of my other income. The idea here is if I can earn an additional income unique from my first, they are less likely to both fail or slump at the same time. Basically when it comes to earning a living, I don’t want all my eggs in one basket. I have some ideas on how I’m going to do this and am looking forward to pulling the trigger soon.

5. Building A Rainy Day Plan

Here’s the truth, in life, there are going to be bad days and even a few horrible days. Some will be annoying, but a good night sleep will fix it, others will be catastrophic: illness, job loss, death of loved one, divorce, etc. In either case you really only need two things: the support of loved ones and time to work through it. So we know these things are going to happen, so why don’t we plan for it?

For me a rainy day plan means: have money in the bank so I can live without working for at least a year, have food tucked away for 3 months, have health insurance and I am moving quickly to being debt free. What this means is if something really bad happens I can just take the time to work through it, do what is best for me at that moment. I don’t have to worry about work, how I’m going to put food on the table, or pay my bills; I can just deal with that situation, with that grief, with that problem. In these times you’re best hope is to minimize what you have to worry about and maintain or boost what is most comforting to you.

Your Turn!

How can you take the good in your life and take it up a notch?

What do you do to weather the bad times and not worry in the good times?

I recently was listening to a podcast where a quote was given that struck me. I have been thinking a lot recently about how predetermined and designed life can be for us unless we wake up and take charge. The quote was:

It’s called the American dream because you

have to be asleep to believe it.

Wake from your slumber!

The scary thing is if we don’t wake up from this slumber of complacency, our lives are influenced to a point that defies common sense. It may be extreme sounding, but to be a cog in the machine, to work long hours only to “buy, buy, buy!” it’s like we are merely an engine which we fuel consumerism. That isn’t to say that to consume, buy or trade is inherently wrong, but to do it with such abandon that the average American has over $15,000 in credit card debt is insane. (source)

Being “awake” is an odd experience when people some call tiny housers crazy for living in a tiny house. If I were to have no debt of any kind and $10 in my pocket, I’d have more wealth than 25% of Americans combined! If I have no debt and $15,000, I’d have a higher net worth than about the bottom third of Americans… combined! (source)

We are told debt is normal, that credit cards are normal, that a home loan and a student loans are a “good investment” and people believe it. I believed it for a time! I have a Master’s degree and after crunching the numbers, it panned out financially, but that is quickly changing for many people. (source) A home loan… no thank you. I have friends who talk about buying a home, with no money down and all I can think of is “I want you to be happy, but I can’t but help question the wisdom of not being able to afford a down payment, but thinking you can afford a house”.

I don’t think it’s my place to say people can’t shop till they drop, have no debt of any kind or they should live in a tiny house. But I struggle when I see people – particularly friends – taking this predetermined path without giving it serious consideration. If someone were to be fully aware of things and still decided to proceed, I’d be okay with that, but blindly following the pattern is scary.

As I’ve grown older, I’ve seen more and more of my friends get into the grind of adulthood and be miserable in their jobs; luckily I think this is the minority of my friends/acquaintances. I’ve had friends comment that they now drink more than they used to because it makes the work week a bit more bearable.

I see consumerism as a troublesome band-aid for many folks who are unhappy with some aspect of their life. Again, I’m not saying no consuming, there are things we need in life, but it shouldn’t be a coping mechanism like it is used today for so many. I was shocked to find out that I know several people who go to the mall and shop 2-3 times a week! I think the city where I live, Charlotte, is on the extreme end of this, because I have 6 large malls within a 30 minute drive of my home; there is even tour bus companies here that bring people to our city just to shop!

To not just complain about it all, below are some things that might help determine your own path.

Consider what your goals are in life, then look at why they are your goals, dig deep.

Write a personal mission statement.

Do the math on what debt really means for you.

Ask yourself “if I could do anything right now, what would it be?”

Identify the reason you cannot do number 4 right now… How can you eliminate that?

Consider how resilient your currently are in your situation. How can you be more resilient?

Identify stressors and potential disrupts, guard against or change to eliminate.

To close I thought I’d share this poem, which I used part of in the title. It’s by Dylan Thomas

Do not go gentle into that good night,Old age should burn and rave at close of day;Rage, rage against the dying of the light.

Though wise men at their end know dark is right,Because their words had forked no lightning theyDo not go gentle into that good night.

Good men, the last wave by, crying how brightTheir frail deeds might have danced in a green bay,Rage, rage against the dying of the light.

Wild men who caught and sang the sun in flight,And learn, too late, they grieved it on its way,Do not go gentle into that good night.

Grave men, near death, who see with blinding sightBlind eyes could blaze like meteors and be gay,Rage, rage against the dying of the light.

And you, my father, there on the sad height,Curse, bless, me now with your fierce tears, I pray.Do not go gentle into that good night.Rage, rage against the dying of the light.

I started watching this video today and was floored by not only how good it was, not only how true it was, but also how much it just resonated with me. I think every tiny house person should watch this and even non tiny house people.

The quotes that stood out for me is “if you don’t answer this question [what does freedom mean to me] there is a corporation, company or product that is happy to answer it for you”